<PAGE>

                                                                   EXHIBIT 10.12

        SAIC/ NANOSYS MASTER MARKETING AND BUSINESS DEVELOPMENT AGREEMENT

This Master Marketing Agreement ("Agreement"), is entered into as of the later
of the dates set forth at the end of this Agreement (the "Effective Date"), by
and between Nanosys, Incorporated, a corporation duly organized under the laws
of the State of Delaware and having its principal place of business at 2625
Hanover Street, Palo Alto, California ("Nanosys"), and Science Applications
International Corporation, a corporation duly organized under the laws of the
State of Delaware and having its principal place of business at 10260 Campus
Point Drive, San Diego, California 92121, through its Advanced Systems Group
("SAIC"). Nanosys and SAIC may hereinafter be referred to individually as a
"Party" or collectively as the "Parties".

WHEREAS, SAIC is recognized as a leader in the information technology and
systems integration field with technologies and expertise that includes, but is
not limited to, systems design and engineering, database architecture, software
development, and large project management;

WHEREAS, Nanosys is recognized as a leader in the development of nanotechnology
materials and nanotechnology enabled modules, systems and processes;

WHEREAS, the Parties, from time to time, have collaborated in order to bid for
and to perform under contracts and grants awarded by various agencies of the
United States government; and

WHEREAS, Nanosys and SAIC mutually desire to establish a preferred marketing
relationship with each other in order to identify and pursue additional
contracts and awards with the United States government ("Opportunities")
relating to nanoscience and nanotechnology as a team, to further both their
businesses;

NOW THEREFORE, in consideration of the mutual terms and conditions set forth
herein, the Parties hereby agree as follows:

1.       Scope of the Agreement. This Agreement is a master agreement that
         commits the Parties to work together for their mutual benefit to
         identify and advise each other as to specific Opportunities to market
         and advertise their respective services and products in accordance with
         the following terms, and as provided by Attachment A. SAIC will perform
         activities in the following areas: systems integration; joint prototype
         development; and marketing. Nanosys will perform activities in the
         following areas: nanotechnology materials and nanotechnology-enabled
         module development; joint prototype development; and marketing support.
         Each Opportunity that is to be jointly pursued by the Parties shall be
         defined and described in written, mutually agreed-upon exhibits
         attached hereto (each a "Marketing Exhibit"). Each Marketing Exhibit
         shall specify the particular Opportunity, the complementary products
         and/or services to be marketed, the prospective customer base, and the
         scope of effort required of each Party. Each Marketing Exhibit shall,
         when executed, become an addendum to this Agreement. The first
         Marketing Exhibit shall be titled "Marketing Exhibit No. 1," and
         additional Marketing Exhibits shall be numbered sequentially.

         (a)      The obligations of the Parties under this Agreement are
                  non-exclusive. `Either Party may, at any time and for any
                  reason, enter into similar arrangements with any other entity
                  with respect to the same or similar areas or Opportunities set
                  forth in the Marketing Exhibits or for any other business
                  purposes. However, notwithstanding the foregoing, for any
                  given Opportunity for which: (1) the Parties have
                  complementary technology and/or intellectual property for
                  addressing such Opportunity; (2) a Party chooses not to pursue
                  such Opportunity on its own, or with a partner entity or
                  organization that is already a Strategic Commercial Partner of
                  such Party at the time the Party chooses to pursue such
                  opportunity; (3) a Party does not already have a proposal
                  submitted for such Opportunity; (4) a Party has not had such
                  Opportunity presented to such Party by a third party; and (5)
                  resources for pursuing such Opportunity are supported
                  Resources pursuant to Section 2 of this Agreement; then each
                  Party agrees to offer to the other Party the first opportunity
                  to enter into a Marketing

                                  Page 1 of 14
                                    7/7/2003
<PAGE>
                  Exhibit for such Opportunities contemplated to be pursued by
                  such Party. In the event that a Party desires to pursue an
                  Opportunity on its own, it shall notify the other Party to
                  allow the other Party an opportunity to present information
                  supporting the JOINT pursuit of such Opportunity by the
                  Parties hereto. The Party being offered the first opportunity
                  to enter into a Marketing Exhibit or to present information
                  supporting the joint pursuit of an Opportunity, shall
                  communicate any acceptance of such offer to the other Party
                  within a reasonable time, which time is not to exceed ten(10)
                  business days, unless otherwise agreed to by the Parties in
                  writing. If the offer of first opportunity or to present
                  information for joint pursuit is rejected, or not accepted
                  within such reasonable time, either Party is then free to
                  pursue the Opportunity on its own or with any other person or
                  entity. Further, commencing upon the execution of a Marketing
                  Exhibit and continuing during the effectiveness of any
                  definitive agreement relating thereto, the Parties agree that
                  they shall not participate in any effort to prepare or submit
                  a separate proposal relating to the specific technology,
                  application and customer of the Opportunity identified in the
                  Marketing Exhibit. Strategic Commercial Partner shall mean a
                  partner entity or organization with which the Party has a
                  fully executed commercial development agreement.

         (b)      Except as set forth in this Agreement or a Marketing Exhibit
                  executed hereunder, each Party will bear all costs, risks and
                  liabilities incurred by it arising out of its obligations and
                  efforts under this Agreement and any such Marketing Exhibit.
                  Unless otherwise specified in this Agreement or a Marketing
                  Exhibit, neither Party shall have any right to any
                  reimbursement, payment or compensation of any kind from the
                  other Party for activities pursuant to this Agreement or a
                  Marketing Exhibit.

         (c)      This Agreement, including all Marketing Exhibits, sets forth
                  the provisions and conditions pursuant to which the Parties
                  may identify and advise each other of a mutually beneficial
                  Opportunity.

         (d)      Each Party shall designate one or more duly authorized
                  representatives to interact with the other for purposes of
                  this Agreement. Initially, [*** Redacted] and [*** Redacted]
                  shall be the representatives of Nanosys and [*** Redacted] and
                  [*** Redacted] shall be the representatives of SAIC. Each
                  Party's representative(s) may select and submit to the other
                  for its consideration such Opportunities that the Party
                  believes may be of mutual interest and the representatives
                  shall jointly determine whether to pursue such Opportunity
                  together. If the Parties determine to pursue an Opportunity
                  jointly, the representatives shall determine jointly the
                  appropriate marketing strategy; including planning for
                  directing the timing and use of the Resources described in
                  Section 2 which efforts shall be reflected in a Marketing
                  Exhibit hereto. At least one representative of each Party
                  shall meet and confer periodically with at least one
                  representative of the other as necessary, either in person or
                  by telephone, to discuss prospective Opportunities and
                  performance with respect to existing Marketing Exhibits
                  (including, but not limited to the Parties obligations under
                  Section 2 below). The Parties agree that the representatives
                  shall meet at agreed-upon intervals but not less than once in
                  any calendar quarter. Subject to the provisions of section
                  1(a) above relating to the Parties' actions commencing upon
                  execution of a Marketing Exhibit and continuing during the
                  effectiveness of any definitive agreement relating thereto, if
                  either Party's representative determines that it is not in
                  that Party's best interest to initiate or continue an
                  Opportunity jointly, either Party is free to pursue such
                  Opportunity, using its sole efforts or in conjunction with any
                  other person or entity.

         (e)      In those circumstances where the Parties' marketing efforts
                  identify a specific Opportunity, and the Parties decide to
                  pursue the Opportunity jointly as set forth in a Marketing
                  Exhibit, then the Parties agree to enter into good faith
                  negotiations to execute an appropriate definitive agreement
                  for the particular Opportunity. Generally, it is anticipated
                  that Nanosys would primarily apply its nanoscience and
                  nanotechnology development expertise and be the


*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

                                  Page 2 of 14
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<PAGE>

                  preferred provider of any nanotechnology-based modules to the
                  Opportunity, and SAIC would primarily apply its system
                  integration expertise to the Opportunity. Each such definitive
                  agreement shall contain terms and conditions that are
                  customary for a teaming agreement, including, but not limited
                  to, allocating responsibility for preparation of proposals and
                  determining the structure of the proposal effort. Each such
                  definitive agreement shall set forth additional mutually
                  agreed-upon terms and conditions with respect to the rights
                  and obligations of the Parties with regard to that specific
                  Opportunity.

2.       Mutual Commitment to Fund the Initiative.

         (a)      The Parties agree that, in order to initially support the
                  marketing activities associated with the Opportunities
                  anticipated to be identified in Marketing Exhibits, the work
                  of approximately [*** Redacted] full time employee equivalents
                  ("FTEs", the FTEs and associated costs are collectively
                  referred to as the "Resources") will be necessary to
                  specifically support the marketing activities associated with
                  the Opportunities. The effort of each individual supporting an
                  Opportunity will be dedicated at a percentage agreed upon by
                  the representatives of each party authorized by this
                  Agreement. The Resources needed will include technical and
                  marketing resources. The Parties agree that Nanosys shall be
                  responsible for providing Resources equivalent to [***
                  Redacted] FTEs and SAIC shall be responsible for providing
                  Resources equivalent to [*** Redacted] FTEs.

         (b)      SAIC agrees, during the Initial Term, as defined in Section
                  3(a), to fund the cost of the Resources of both Parties set
                  forth in Section 2(a). Such costs are expected to be burdened
                  actual expenses, not including any fees or profit, and are
                  invoiced monthly in accordance with 2f, below. The funding
                  support will be subject to quarterly reviews, as stated in
                  1(d) above. The maximum Resources funded by SAIC under this
                  section during the Initial Term of this Agreement, and that
                  have not been reimbursed under section 2(c)(iii), are not to
                  exceed $2.2 M, (It is currently estimated that $1.6 M will be
                  allocated to Nanosys and $0.6 M to SAIC), unless otherwise
                  agreed to by the Parties. Resources reimbursed under section
                  2(c)(iii) may, during the Initial Term, be reused to fund
                  additional Resources if mutually agreed by the Parties. Unless
                  specifically agreed upon by the Parties in writing, the work
                  performed by the representatives of the Parties in carrying
                  out their periodic review responsibilities under Section 1(d),
                  shall not be included in the amounts funded by SAIC. Among the
                  tasks to be performed by the Parties' FTEs are support for
                  preparation of proposals for contracts and awards,
                  demonstrations, and marketing presentations.

         (c)      In consideration of SAIC's agreement to fund the Resources
                  (including SAIC Resources) described in paragraph (b) above,
                  the Parties agree that all United States government contract
                  revenue, including the subcontract(s) from one Party to the
                  other Party, ("Contracts") arising out of or resulting from
                  work performed under this Agreement shall be allocated in
                  accordance with the following priority schedule, with funds
                  received under any Contract first being applied to the highest
                  priority category until all costs thereunder are reimbursed,
                  before applying any remaining funds to the next level of
                  priority, etc.:

                           i.       First priority: Reimbursement of reasonable
                                    costs, not including any fee or profit,
                                    incurred in performance of the Contract.

                           ii.      Second priority: Reimbursement of costs, on
                                    a pro-rata basis between Nanosys and SAIC,
                                    not including any fee or profit, incurred
                                    under this Agreement that are incurred in
                                    the performance of the Contract but not
                                    billable to the Contract, and

*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

                                  Page 3 of 14
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<PAGE>

                           iii.     Third priority: Reimbursement of costs
                                    incurred by SAIC in funding the initial Term
                                    of the Agreement under Section 2(b) above.
                                    Such reimbursement will be accomplished
                                    through allocation of fees earned from such
                                    Contracts not allocated under either of the
                                    first or second priorities, above, where
                                    100% of such funds will be applied to the
                                    reimbursement until satisfied and the
                                    balance will be allocated between the
                                    parties at a to-be negotiated rate dependent
                                    upon the relative contributions and
                                    responsibilities of the parties for a given
                                    Contract.

                  Unless otherwise agreed by the Parties in writing, Nanosys
                  shall reimburse SAIC net 30 days after receipt of payment
                  from its prime customer under the applicable Contract.

         (d)      With the exception of income taxes imposed on the Parties,
                  each Party agrees to pay all sales, use, value added, personal
                  property or other taxes of any type that are imposed by any
                  governmental authority on the payments due by such Party to
                  the other Party under this Section 2. Any payment or part of a
                  payment due under this Agreement that is not paid when due
                  shall bear interest at the rate of 1.5% per month, or at the
                  highest rate allowed by law, whichever is less, from its due
                  date until paid.

         (e)      Each Party shall have the right, at its sole expense, to
                  inspect the books and records of the other Party for the
                  purpose of verifying the amounts funded by SAIC and that
                  Nanosys has complied with the payment obligations of this
                  Section 2. Such inspections may be made not more than
                  semi-annually, on not less than fifteen (15) days prior
                  written notice to the other Party, during regular business
                  hours.

         (f)      To fund the Nanosys Resources, SAIC ASG will implement a
                  purchase order with Nanosys which will be incrementally
                  funded, against which Nanosys will submit monthly
                  invoices in accordance with the terms of the purchase order.
                  Invoices will be paid net 30 days. A proper invoice may be
                  in Nanosys standard commercial format but must include, at a
                  minimum, detailed costs for the period covered by the invoice
                  and accumulated costs. Detailed costs are defined as hours by
                  individual labor categories, fully burdened labor and other
                  fully burdened expenses such as are described in general in 2a
                  above and not including any fee or profit.


         To provide participation insight to Nanosys, SAIC ASG will prepare
         financial statements on an SAIC "financial-period" basis , to be made
         available to Nanosys, by the 5th working day after the close of the
         four-week accounting period for which the financial statement is
         prepared.. Financial statements will identify current and cumulative
         total costs for Labor and ODC's as defined in paragraphs 2(a) and 2(b)
         above.


3.       Term and Termination.

         (a)      This Agreement shall have an initial term of twenty-four (24)
                  months commencing on the Effective Date (the "Initial Term").
                  Following the Initial Term, this Agreement may be extended
                  only by the written, signed, mutual agreement of both Parties
                  for an additional period of twelve (12) months (each, a
                  "Renewal Term"), which such written mutual commitment shall be
                  executed at least ninety (90) days prior to the end of the
                  Term immediately preceding such Renewal Term. For purposes of
                  this Agreement, the Initial Term and any Renewal Terms shall
                  be known as the Term.

         (b)      Either Party may terminate this Agreement as of the last day
                  of each calender quarter including and after the first
                  anniversary of the Effective Date, provided that such
                  termination must be communicated to the other party in writing
                  at least ninety (90) days prior to such termination date.





                                  Page 4 of 14
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<PAGE>

         (c)      Upon the termination or expiration of this Agreement, each
                  Party will destroy or return to the other Party all drawings,
                  specifications, manuals and other printed or reproduced
                  material (including information stored on machine readable
                  media) provided by the disclosing Party to the receiving Party
                  and shall use commercially reasonable efforts to destroy all
                  backup copies of such information made by the receiving Party
                  or its employees, wherever located. The obligations of this
                  section do not apply to any materials and/or information of
                  the disclosing Party that is necessary for the perfection
                  and/or enforcement of any rights to Intellectual Property
                  developed under this Agreement that is owned in whole or in
                  part by the receiving Party. Any Confidential Information
                  retained by the receiving Party hereunder shall remain subject
                  to the provisions of the Non-Disclosure Agreement attached a
                  Exhibit A.

         (d)      The Parties acknowledge that termination or expiration of this
                  Agreement shall terminate each Marketing Exhibit executed
                  hereunder, unless the Parties expressly agree to the contrary
                  in writing. However, any definitive agreements entered into
                  between the Parties as a result of their efforts hereunder
                  shall not be terminated upon the termination or expiration of
                  this Agreement and shall survive according to their terms.
                  Additionally, the obligations of paragraph 2(c) shall survive
                  any termination.

4.       Intellectual Property.

         (a)      The Parties shall each retain ownership of and all right,
                  title and interest in and to their respective pre-existing
                  Intellectual Property (as that term is defined in Article 4(c)
                  below), and no license or right to use therein, whether
                  express or implied, is granted by this Agreement or as a
                  result of the work performed by either Party hereunder or in
                  pursuit hereof. To the extent the Parties wish to grant to the
                  other rights or interests in pre-existing Intellectual
                  Property, separate license agreements on mutually acceptable
                  terms will be executed.

         (b)      For all Intellectual Property developed under this Agreement
                  by the Parties (hereinafter referred to as "Collaboration
                  Intellectual Property"), all Nanotechnology Related
                  Collaboration Intellectual Property shall be solely owned by
                  Nanosys, regardless of inventorship. For purposes of this
                  Agreement, "Nanotechnology Related Collaboration Intellectual
                  Property" is Intellectual Property in [*** Redacted]
                  nanomaterials having at least [*** Redacted] of
                  [*** Redacted], including [*** Redacted] of such materials,
                  composites including such materials, nano to macro world
                  interface technology for such materials, and the fabrication
                  and processing of such materials. All non-Nanotechnology
                  Related Collaboration Intellectual Property such as systems,
                  use, and applications shall be owned according to U.S. laws of
                  intellectual property inventorship and ownership with
                  Collaboration Intellectual Property that is solely conceived
                  by the employees, agents or contractors of one Party being
                  solely owned by that Party with all rights appurtenant
                  thereto, and with non-Nanotechnology related Collaboration
                  Intellectual Property that is jointly conceived by the
                  employees, agents or contractors of both Parties being jointly
                  owned, with all joint rights appurtenant thereto and without
                  obligation to obtain consent or account to the other Party to
                  exploit, license or transfer jointly owned Intellectual
                  Property.

         (c)      As used herein the term "Intellectual Property" shall mean
                  patents, copyrights, trade marks, trade names, inventions
                  (whether or not patentable), works of authorship, trade
                  secrets, techniques, know-how, ideas, concepts, algorithms and
                  all other forms of intellectual property rights. As used
                  herein the term "pre-existing Intellectual Property" means any
                  Intellectual Property previously conceived, developed or
                  reduced to tangible medium as demonstrated by written
                  documentation.

5.       Warranty Disclaimer and Limitation of Liability. Neither Party makes
         any warranties whatsoever to the other Party, express or implied, with
         regard to the products or services of that Party or any matter relating
         to this Agreement and any Marketing Exhibits, and each Party
         specifically disclaims all such

*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.


                                  Page 5 of 14
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<PAGE>

         warranties and conditions, including any warranty of title,
         merchantability, and fitness for a particular purpose. In no event
         shall either Party be liable to the other for any punitive, exemplary,
         special, indirect, incidental or consequential damages (including, but
         not limited to, lost profits, lost revenues, lost business
         opportunities, loss of use or equipment down time, and loss of or
         corruption to data) arising out of or relating to this Agreement or any
         Marketing Exhibit, regardless of the legal theory under which such
         damages are sought, and even if the Parties have been advised of the
         possibility of such damages or loss. The liability of either Party to
         the other for any claims, liabilities, actions or damages arising out
         of or relating to this Agreement or any Marketing Exhibit, howsoever
         caused and regardless of the legal theory asserted, including breach of
         contract or warranty, tort, strict liability, statutory liability or
         otherwise, shall not, in the aggregate, exceed the amount of
         out-of-pocket costs incurred by the other Party in connection with the
         specific Marketing Exhibit or opportunity under which such claim arose.

6.       Confidentiality. In the performance of this Agreement and any Marketing
         Exhibits executed hereunder, certain information may be exchanged
         between the Parties that is proprietary and confidential in nature.
         This proprietary and confidential information is exchanged solely for
         the purposes set forth in this Agreement and any such Marketing
         Agreement. This proprietary and confidential information shall remain
         the property of the disclosing Party and shall be subject to the terms
         and conditions of the Non-Disclosure Agreement attached hereto as
         Exhibit A. Prior to any transfer of materials under this Agreement, the
         Parties agree that they will execute a Materials Transfer Agreement
         that will be separately agreed to by the Parties.

7.       Export Control. The Parties to this Agreement shall comply with all
         applicable United States export and foreign import laws, rules, and
         regulations in the performance of the Parties' responsibilities and
         obligations under this Agreement. Without limiting the generality of
         the foregoing, the Parties shall not disclose any U.S.-origin products,
         know-how, technical data, documentation, or other products or materials
         furnished to it pursuant to this Agreement, to any person or in any
         manner which would constitute a violation of the export control
         regulations of the United States then in effect.

8.       Disputes. Any controversy, claim or dispute ("Dispute") arising out of
         or relating to this Agreement shall be resolved by binding arbitration
         in accordance with the Commercial Arbitration Rules of the American
         Arbitration Association then in effect. Before commencing any such
         arbitration, the Parties agree to enter into negotiations to resolve
         the Dispute. If the Parties are unable to resolve the Dispute by good
         faith negotiation within Sixty (60) days of entering into such
         negotiations, then either Party may refer the matter to arbitration.
         The arbitration shall take place in the County of San Diego, State of
         California. The arbitrator(s) shall be bound to follow the provisions
         of this Agreement in resolving the dispute, and may not award any
         damages which are excluded by this Agreement. The decision of the
         arbitrator(s) shall be final and binding on the Parties, and any award
         of the arbitrator(s) may be entered or enforced in any court of
         competent jurisdiction. Any request for arbitration of a claim by
         either Party against the other relating to this Agreement must be filed
         no later than one (1) year after the date on which this Agreement
         expires or terminates, or such claim shall be time barred.

9.       Notices. All notices, certificates, acknowledgments or other written
         communications (hereinafter referred to as "Notices") required to be
         given under this Agreement shall be in writing and shall be deemed to
         have been given and properly delivered if duly mailed by certified or
         registered mail to the other Party at its address as follows, or to
         such other address as either Party may, by written notice, designate to
         the other. Additionally, Notices sent by any other means (i.e.,
         facsimile, overnight delivery, courier, and the like) are acceptable
         subject to written confirmation of both the transmission and receipt of
         the Notice.

                                  Page 6 of 14
                                    7/7/2003


<PAGE>

Larry Bock                                    Janet V. LaFever
President and CEO                             Vice President for Administration
Nanosys, Incorporated                         Science Applications
2625 Hanover Street                           International Corporation
Palo Alto, CA 94304                           1710 SAIC Drive, M/S 2-3-1
Telephone (650) 331-2105                      McLean, VA 22102
Fax       (650) 331-2101                      Telephone 703-676-4031
e-mail    lbock@nanosysinc.com                Fax       (703)-676-2298
                                              e-mail    Janet.v.lafever@saic.com

10.      Assignment. This Agreement may not be assigned, novated or otherwise
         transferred by operation of law or otherwise by either Party without
         the prior written consent of the other Party, which consent shall not
         be unreasonably withheld. Any change of control of a Party shall be
         deemed an assignment of this Agreement that does not require the prior
         written consent of the other Party. For purposes of this Agreement,
         "change of control" means any merger, consolidation, sale of all or
         substantially all of the assets or sale of a substantial block of
         stock, of a Party. Any such assignment, novation or transfer by one
         Party not in accordance with this provision shall be a material breach
         of this Agreement and shall be grounds for immediate termination
         thereof by the non-breaching Party, in addition to any other remedies
         that may be available at law or in equity to the non-breaching Party.

11.      Waiver or Modification. This Agreement may be modified, or part(s)
         hereof waived, only by an instrument in writing specifically
         referencing this Agreement and signed by an authorized representative
         of the Party against whom enforcement of the purported modification or
         waiver is sought.

12.      Relationship of Parties. The Parties are acting as independent
         contractors in all respects with regard to this Agreement. Nothing
         contained in this Agreement shall be deemed or construed to create a
         partnership, joint venture, agency, or otherwise as participants in a
         joint or common undertaking. Nothing in this Agreement shall be deemed
         to give either Party any power to direct or control any activities of
         the other, including marketing activities, or any power to bind or
         obligate the other. No employee of one Party shall be deemed an
         employee of the other.

13.      Publicity. Neither Party may issue a press release or make any
         disclosure to any other person or entity regarding the existence of or
         the subject matter of this Agreement without the prior written consent
         of the other Party, which consent shall not be unreasonably withheld.
         Notwithstanding the foregoing, either Party may reasonably disclose the
         terms of this Agreement to the extent necessary to comply with any laws
         or government regulations, provided that the Party that is required to
         disclose the Agreement gives the other Party notice of such required
         disclosure and takes reasonable steps to minimize the extent of such
         disclosure.

14.      Applicable Law. This Agreement shall be governed by and construed under
         the laws of the State of California, without regard to its laws
         relating to conflict or choice of laws.

15.      Entire Agreement. This Agreement, including any and all Exhibits
         attached hereto, which are hereby incorporated by reference,
         constitutes the entire agreement and understanding between the Parties
         and supersedes and replaces any and all prior or contemporaneous
         proposals, agreements, understandings, commitments or representations
         of any kind, whether written or oral, relating to the subject matter
         hereof.

16.      Multiple Copies or Counterparts. This Agreement may be executed in one
         or more counterparts, each of which shall be deemed an original, but
         all of which together shall constitute one and the

                                  Page 7 of 14
                                    7/7/2003


<PAGE>

         same instrument. This Agreement shall not be effective until the
         execution and delivery between each of the parties of at least one (1)
         set of the counterparts.

17.      Headings. The headings and titles of the various sections of this
         Agreement are intended solely for convenience of reference and are not
         intended to define, limit, explain, expand, modify or place any
         construction on any of the provisions of this Agreement.

IN WITNESS WHEREOF, the Parties represent and warrant that this Agreement is
executed by duly authorized representatives of each Party as set forth on the
date indicated below.


                                        SCIENCE APPLICATIONS
NANOSYS, INCORPORATED                   INTERNATIONAL CORPORATION

/s/     Larry Bock                      /s/   Janet V. LaFever
________________________________        ________________________________________

        Larry Bock                            Janet V. LaFever
________________________________        ________________________________________
Name                                    Name
        President and CEO                     Vice President for Administration
________________________________        ________________________________________
Title                                   Title

                                              9 July 03
________________________________        ________________________________________
Date                                    Date





                                  Page 8 of 14
                                    7/7/2003

<PAGE>

                                  ATTACHMENT A

                             AREAS OF RESPONSIBILITY

1.       SAIC is anticipated to perform activities in the area of systems
         integration.

2.       Nanosys is anticipated to perform activities in the areas of
         nanotechnology and module development.

3.       SAIC and Nanosys are anticipated to jointly perform activities in the
         areas of prototype development and marketing support.

4.       Nanosys agrees to make its facilities, equipment, materials, etc.,
         available at no additional cost above Nanosys' fully burdened FTE rate,
         as reasonably needed to support the joint prototype development and
         marketing support activities.

5.       SAIC agrees to make its procurement and contract preparation and
         administration infrastructure, and its facilities, equipment materials,
         etc., available at no additional cost above SAIC's fully burdened FTE
         rate, as reasonably needed to support the joint prototype development
         and marketing support activities.

6.       The Advanced Systems Group will promote its relationship with Nanosys
         within SAIC and act as a liaison to encourage and facilitate the
         development of additional Marketing Exhibits among Nanosys and other
         organizations within SAIC. Nanosys will reasonably support such
         additional efforts.

                                  Page 9 of 14
                                    7/7/2003
<PAGE>

                             MARKETING EXHIBIT NO. 1

                                 Page 10 of 14
                                    7/7/2003
<PAGE>

                                    EXHIBIT A

                            NON-DISCLOSURE AGREEMENT

                                 Page 11 of 14
                                    7/7/2003
<PAGE>

NOTE: Each Party has a hardcopy of the signed NDA.

     SAIC STANDARD NON-DISCLOSURE (CONFIDENTIALITY) AGREEMENT (PAGE 1 OF 3)

                            NON-DISCLOSURE AGREEMENT
                             PROPRIETARY INFORMATION

This is an Agreement, effective 4 June 2003 between Science Applications
International Corporation, a Delaware Corporation (hereinafter referred to as
"SAIC") and Nanosys Inc., a Delaware Corporation (hereinafter referred to as
"Nanosys"). It is recognized that it may be necessary or desirable to exchange
information between SAIC and Nanosys regarding inorganic semiconductor
nanomaterials and their applications for the purpose of using the information to
discuss potential marketing areas and for marketing the opportunities identified
under the SAIC/Nanosys Master Marketing Agreement. With respect to the
information exchanged between the parties subsequent to this date, the parties
agree as follows:

(1) "Proprietary Information" shall include, but not be limited to, performance,
sales, financial, contractual and special marketing information, ideas,
technical data and concepts originated by the disclosing party, not previously
published or otherwise disclosed to the general public, not previously available
without restriction to the receiving party or others, nor normally furnished to
others without compensation, and which the disclosing party desires to protect
against unrestricted disclosure or competitive use, and which is furnished
pursuant to this Non-Disclosure Agreement and appropriately identified as being
proprietary when furnished.

(2) In order for proprietary information disclosed by one party to the other to
be protected in accordance with this Non-Disclosure Agreement, it must be: (a)
in writing; (b) clearly identified as proprietary information at the time of its
disclosure by each page thereof being marked with an appropriate legend
indicating that the information is deemed proprietary by the disclosing party;
and (c) delivered by letter of transmittal to the individual designated in
Paragraph 3 below, or his designee. Where the proprietary information has not
been or cannot be reduced to written form at the time of disclosure and such
disclosure is made orally and with prior assertion of proprietary rights
therein, such orally disclosed proprietary information shall only be protected
in accordance with this Non-Disclosure Agreement provided that complete written
summaries of all proprietary aspects of any such oral disclosures shall have
been delivered to the individual identified in Paragraph 3 below, within 20
calendar days of said oral disclosures. Neither party shall identify information
as proprietary which is not in good faith believed to be confidential,
privileged, a trade secret, or otherwise entitled to such markings or
proprietary claims.

(3) In order for either party's proprietary information to be protected as
described herein, it must be submitted in written form as set forth in Paragraph
2 above to the individuals identified below:

SCIENCE APPLICATIONS                           NANOSYS INC.
INTERNATIONAL CORPORATION

<TABLE>
<S>              <C>                           <C>             <C>
Name:            Martin Fritts, Ph.D.           Name:           Stephen Empedocles, Ph.D.
Title:           Senior Scientist               Title:          Director of Business Development
Address          2111 Eisenhower Avenue         Address:        Corporate Headquarters
                 Suite 303                                      2625 Hanover Street
                 Alexandria, VA 22314                           Palo Alto, CA 94304
Telephone No:    703-842-2606                   Telephone No:   650-776-8530
FAX No:          703-842-2618                   FAX No:         650-745-1273
</TABLE>

*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

                                 Page 12 of 14
                                    7/7/2003
<PAGE>

     SAIC STANDARD NON-DISCLOSURE (CONFIDENTIALITY) AGREEMENT (PAGE 2 OF 3)

(4) Each party covenants and agrees that it will, notwithstanding that this
Non-Disclosure Agreement may have terminated or expired, keep in confidence, and
prevent the disclosure to any person or persons outside its organization or to
any unauthorized person or persons, any and all information which is received
from the other under this Non-Disclosure Agreement and has been protected in
accordance with paragraphs 2 and 3 hereof; provided however, that a receiving
party shall not be liable for disclosure of any such information if the same:

         A.       Was in the public domain at the time it was disclosed, or
                  ____________

         B.       Becomes part of the public domain without breach of this
                  Agreement, or

         C.       Is disclosed with the written approval of the other party, or

         D.       Is disclosed after three years from receipt of the
                  information, or

         E.       Was independently developed by the receiving party, or

         F.       Is or was disclosed by the disclosing party to a third party
                  without restriction, or

         G.       Is disclosed pursuant to the provisions of a court order.

         As between the parties hereto, the provisions of this Paragraph 4 shall
supersede the provisions of any inconsistent legend that may be affixed to said
data by the disclosing party, and the inconsistent provisions of any such legend
shall be without any force or effect.

         Any protected information provided by one party to the other shall be
used only in furtherance of the purposes described in this Agreement, and shall
be, upon request at any time, returned to the disclosing party. If either party
loses or makes unauthorized disclosure of the other party's protected
information, it shall notify such other party immediately and take all steps
reasonable and necessary to retrieve the lost or improperly disclosed
information.

(5) The standard of care for protecting Proprietary Information imposed on the
party receiving such information, will be that degree of care the receiving
party uses to prevent disclosure, publication or dissemination of its own
proprietary information.

(6) Neither party shall be liable for the inadvertent or accidental disclosure
of Proprietary Information if such disclosure occurs despite the exercise of the
same degree of care as such party normally takes to preserve its own such data
or information.

(7) In providing any information hereunder, each disclosing party makes no
representations, either express or implied, as to the information's adequacy,
sufficiency, or freedom from defect of any kind, including freedom from any
patent infringement that may result from the use of such information, nor shall
either party incur any liability or obligation whatsoever by reason of such
information, except as provided under Paragraph 4, hereof.

(8) Notwithstanding the termination or expiration of any Teaming Agreement
executed in conjunction with this Agreement, the obligations of the parties with
respect to proprietary information shall continue to be governed by this
Non-Disclosure Agreement.

                                 Page 13 of 14
                                    7/7/2003
<PAGE>

     SAIC STANDARD NON-DISCLOSURE (CONFIDENTIALITY) AGREEMENT (PAGE 3 OF 3)

(9) This Non-Disclosure Agreement contains the entire agreement relative to the
protection of information to be exchanged hereunder, and supersedes all prior or
contemporaneous oral or written understandings or agreements regarding this
issue. This Non-Disclosure Agreement shall not be modified or amended, except in
a written instrument executed by the parties.

(10) Nothing contained in this Non-Disclosure Agreement shall, by express grant,
implication, estoppel or otherwise, create in either party any right, title,
interest, or license in or to the inventions, patents, technical data, computer
software, or software documentation of the other party.

(11) Nothing contained in this Non-Disclosure Agreement shall grant to either
party the right to make commitments of any kind for or on behalf of any other
party without the prior written consent of that other party.

(12) The effective date of this Non-Disclosure Agreement shall be the date
stipulated at the beginning of this Agreement.

(13) This Non-Disclosure Agreement shall be governed and construed in accordance
with the laws of the State of California.

SCIENCE APPLICATIONS                                               NANOSYS INC.
INTERNATIONAL CORPORATION

<TABLE>
<S>                     <C>                                        <C>                     <C>
Signature: _____________________________

Name:                                                              Name:
                        Janet V. LaFever

Title:                  Deputy Group Director of Contracts         Title:

Address:                1710 SAIC Drive, M/S 2-3-1                 Address:                2625 Hanover Street
                        McLean, VA 22102                                                   Palo Alto, CA 94304

Telephone No:           (703) 676-4031                             Telephone No:

FAX No:                 (703) 676-2298                             FAX No.
</TABLE>

*** Confidential treatment requested pursuant to a request for confidential
treatment filed with the Securities and Exchange Commission. Omitted portions
have been filed separately with the Commission.

                                  Page 14 of 14
                                    7/7/2003